France and Qatar seal $7 bln Rafale fighter jet deal

* Looking to modernise, Qatar to buy 24 jets

* Purchase comes amid instability across Middle East

* Dassault seals third Rafale sale this year (Adds delivery schedule, Qatar context)

By John Irish and Cyril Altmeyer

PARIS, April 30 (Reuters) - Qatar has agreed to buy 24 Dassault Aviation (Paris: FR0000121725 - news) -built Rafale fighter jets in a 6.3-billion-euro ($7 billion) deal, the French government said on Thursday, as the Gulf Arab state looks to boost its military firepower in an increasingly unstable region.

Tensions in the Middle East with conflicts in Yemen, Syria and Libya, as well as concerns over Shi'ite Muslim power Iran's growing influence in the area, have fuelled a desire across Sunni Gulf Arab states to modernise their military hardware.

The contract - the third this year for Dassault after deals to sell Rafale jets to Egypt and India - also includes MBDA missiles, and the training of 36 Qatari pilots and 100 technicians by the French army, a French Defence Ministry official said.

"The president spoke to Sheikh Tamim bin Hamad al-Thani, the Emir of Qatar, who confirmed his desire to buy 24 Rafale combat planes," President Francois Hollande's office said.

Eleven planes will be delivered each year from mid-2018. Dassault Chief Executive Eric Trappier told BFM TV Qatar had an option to buy 12 more planes.

Hollande will travel to Doha on May 4 to sign the contract before heading to Saudi Arabia as an honorary guest at a summit of Gulf Arab leaders.

Paris has close commercial and political ties with Qatar and Hollande will push further business interests in the country as well as encourage investment into France, where the gas-rich Gulf state already has assets of about $10 billion.

Qatar - home to Al Udeid, the largest U.S. air base in the Middle East - has been a major player in air strikes in the region despite its limited air force, mainly made-up of Dassault-built Mirage warplanes.

It has taken part in operations to oust Libyan President Muammar Gaddafi, strikes in Syria against Islamic State militants and most recently in the Saudi-led coalition's campaign against Yemen's Shi'ite Houthi rebels.

Over the last three years Qatar has sought to expand its armed forces and upgrade its equipment.

UAE TALKS

The Rafale sales have lifted French arms exports this year to about 15 billion euros and have been a welcome boost for Dassault, which had been under increasing pressure to sell the plane overseas after years of failures.

Dassault shares were up 3.82 percent at 1430 GMT.

Dassault is also in talks aimed at supplying 16 of the multi-role combat jets to Malaysia and has resumed discussions over potential fighter sales to another Gulf Arab state, the United Arab Emirates. A senior French diplomat said the talks with the UAE were "going pretty well".

A leading European defence analyst, however, said the Qatar deal could weaken the Rafale's chances of being chosen by the UAE, and boost the chances of the rival Eurofighter Typhoon.

"If recent history is a guide, now that Qatar has gone for Rafale, that should kill the Rafale's prospects in the UAE," said Francis Tusa, editor of Defence Analysis.

"It is possibly the only the good news for (Eurofighter) Typhoon, which has been languishing as both Rafale and Gripen have seen significant export sales recently."

The Eurofighter is built by Airbus Group (Swiss: AIR.SW - news) , Finmeccanica (Other OTC: FINMF - news) and BAE Systems (LSE: BA.L - news) .

($1 = 0.8934 euros) (Additional reporting by Tim Hepher and Emmanuel Jarry in Paris and Amena Bakr in Doha; Editing by Andrew Callus and Pravin Char)